ROCKVILLE, Md., Aug. 16, 2010 (GLOBE NEWSWIRE) -- Cytomedix, Inc. (NYSE Amex:GTF) (the "Company"), a leading developer of biologically active regenerative therapies for wound care, inflammation and angiogenesis, today announced financial results for the three and six months ended June 30, 2010.
Highlights of the second quarter and recent weeks include the following:
- Acquired the Angel® Whole Blood Separation System ("Angel") and activAT® Autologous Thrombin Processing Kit ("activAT") from the Sorin Group for total cash consideration of $7 million to be paid over the two and one-half years from closing. Together these products had sales of approximately $5 million in 2009, of which more than 90% were from high-margin, single-use disposable products.
- Raised gross proceeds of $3.65 million in a private placement of securities with both new and existing stockholders. The proceeds from this private placement were used to fund the initial upfront $2 million payment on the Sorin asset purchase and for general corporate and working capital purposes.
- Appointed Patrick Vanek as Vice President of Operations to manage all aspects of the Company's technical business, including oversight of the manufacturing process by OEM partners, quality assurance and control, distribution, warehousing and all other operational and logistical aspects of the process; in addition, Mr. Vanek is overseeing the transition of the control over manufacturing and supply chain from Sorin to Cytomedix.
- Launched a sales and marketing initiative in Europe with a seasoned international healthcare marketing specialist.
- Successfully integrated the customer service and order fulfillment operations for the U.S. distribution of the Angel product line.
- Published positive results from the Company's prospective study evaluating the AutoloGel™ System to treat advanced, chronic wounds in the June 2010 issue of the peer-reviewed journal Ostomy Wound Management, demonstrating improved healing in 97% of wounds evaluated including those recalcitrant to previous therapies.
- Presented two posters highlighting use of the AutoloGel System to effect rapid improvement of chronic wounds at the 2010 Joint Conference of the Wound Ostomy and Continence Nurses Society and the World Council of Enterostomal Therapists (WOCN/WCET).
Martin P. Rosendale, Chief Executive Officer of Cytomedix, commented on the quarter, "I am very proud of our Company's performance during the second quarter. Notably our acquisition of the Angel and the activAT products early in the quarter has been accretive and synergistic, as we had projected. The integration process has been successful to date and we are delighted to report no net loss of business or customers through this transition period. The level of pent up demand and interest in the Angel product in the marketplace has confirmed our original belief that the product is truly best in class and positioned for growth with effective and targeted sales efforts. With the customer account transition now largely complete and growing access to new Angel devices available for new customer evaluation and placement, we are optimistic about our growth opportunities over the coming quarters. We continue to expand our domestic sales efforts with the addition of several new sales agents and participation in a number of important clinical congresses specializing in our core areas of focus, namely wound healing, blood management and orthopedics. In addition, we were pleased to announce the launch of our European sales and marketing initiatives. We believe there is a significant and untapped market for our PRP products in Europe upon which experienced leadership can capitalize with our clinically focused marketing strategy.
"Strong growth in AutoloGel System sales continued in the second quarter. We recently completed the new package design that removes steps from the process and provides added convenience. The first production lot for this new system was recently shipped to our facilities and will be released to our customers soon. We remain committed to providing enhanced product packaging and design, and toward that end, remain on track to file a 510(k) application for our enhanced centrifuge system for the AutoloGel System by year end. This important and proprietary enhancement allows for the rapid preparation of PRP in a semi-closed system which is suitable for future PRP indications in growing markets such as orthopedics. It eliminates a number of steps involved in the process, clearly improving the ease of use while lowering our overall cost of goods."
"Importantly, throughout the quarter we continued to publish and present positive clinical data in support of our biologically active regenerative therapy to meaningfully accelerate and enhance the body's own natural healing processes in a variety of exuding wounds – even those resistant to previous therapies. We continue to build a body of compelling clinical data that supports and enhances both our therapeutic and economic value propositions," added Mr. Rosendale.
Second Quarter Results
Total revenues for the second quarter of 2010 were $1.15 million, a 102% increase over total revenues of $569,000 for the second quarter of 2009. The increase was largely attributable to sales of the Angel System and higher AutoloGel System sales, offset by the loss of royalty revenue due to the November 2009 expiration of the patent underlying the Company's prior royalty agreements.
The Company began recording sales of the acquired products effective April 12, 2010. Sales of Angel and associated products were $1.05 million for the second quarter of 2010, which is in line with the Company's expectations and consistent with the sales levels of the products in the months preceding the acquisition. Ownership of the acquired products for the entire second quarter would have added slightly over $100,000 to total revenues. AutoloGel System sales of $95,000 were up 30% compared with $73,000 in the second quarter of 2009 and up 51% sequentially from the first quarter 2010. Due to the November 2009 expiration of the underlying licensing agreements, there were no royalty revenues recorded during the second quarter of 2010.
Gross profit for the second quarter of 2010 rose 2% to $462,000 from $451,000 for the same period in 2009. This reflects higher product sales, offset by the decrease in royalty revenue and higher costs primarily attributable to the one-time sale of inventory adjusted to fair value in accordance with purchase accounting rules, transitory commission charges paid to Sorin during the integration period and the amortization of the intangible asset attributable to patents and know-how acquired from Sorin.
Reported gross margin was 40% for the 2010 second quarter, down from gross margin on product sales of 63% for the 2009 second quarter. Cost of sales for the second quarter of 2010 consisted of certain charges of a non-recurring nature. Finished goods inventory acquired from Sorin, written-up to fair value in accordance with purchase accounting rules, and subsequently sold to customers in the ordinary course of business, resulted in a non-recurring charge to cost of sales of $168,000. Also, a 10% commission earned by Sorin for logistics support during the transition period resulted in a $104,000 charge. Effective August 2nd, Cytomedix established direct control over the domestic distribution process in its entirety and will no longer incur the 10% commission as of that date on domestic sales. Excluding the two items noted above, gross margin was 64%. Further excluding the amortization of the intangible asset attributable to patents and know-how acquired from Sorin of $39,000 in the quarter, gross margin was 67%.
Second quarter 2010 operating expenses increased 51% to $2.02 million from $1.34 million in the prior year second quarter due primarily to increased consulting fees associated with regulatory compliance and CMS reimbursement initiatives, increased legal and accounting fees associated with the acquisition of the Angel and activAT products, increased research and development fees associated with development of the enhanced AutoloGel device and the Company's TAPS program (post-market surveillance study) for the AutoloGel System, and increased general and administrative expenses. In the second quarter of 2010, non-recurring charges relating to the Angel acquisition and integration totaled approximately $234,000.
Total other expenses during the second quarter of 2010 were approximately $275,000 and consisted almost entirely of interest expense. Of this amount, $46,000 reflects cash interest costs while the balance of interest expense reflects amortization of deferred debt issuance costs associated with the warrants issued to certain guarantors of the notes and amortization of the discount on the promissory note to Sorin.
The net loss to common stockholders for the second quarter of 2010 was $3.87 million or $0.10 per share, compared with a net loss to common stockholders of $891,000 or $0.03 per share reported for the second quarter of 2009. The second quarter 2010 net loss includes a charge of $1.95 million, which represents the amortization of a beneficial conversion feature on the Series D preferred stock issued in association with the fundraise conducted in conjunction with the closing of the Sorin acquisition in April 2010. This is a non-recurring, non-cash book charge with no net effect on total shareholders' equity.
First Half Results
Total revenues for the first six months of 2010 were $1.33 million, up 20% from total revenues of $1.11 million in the first six months of 2009, largely attributable to sales of the Angel System and higher AutoloGel System sales offset by the loss of royalty revenue due to the November 2009 expiration of the patent underlying the Company's royalty agreements. Product sales of $1.21 million increased nearly tenfold compared with $115,000 in the first six months of 2009. For the first six months of 2010 royalty revenue decreased to $115,000 from $993,000 for the same period in 2009, due to the patent expiration described above.
Reported gross margin on product sales for the first half of 2010 decreased to 42% from 70% in the same period in 2009. Cost of sales for the first half of 2010 included certain charges of a non-recurring nature. Finished goods inventory acquired from Sorin, written-up to fair value in accordance with purchase accounting rules, and subsequently sold to customers in the ordinary course of business, resulted in a charge of $168,000. The 10% commission earned by Sorin for logistics support during the second quarter resulted in a $104,000 charge and the amortization of the intangible asset charged to cost of sales totaled $39,000. Excluding these items, gross margin on product sales was 68%.
Operating expenses for the first six months of 2010 increased 30% to $3.44 million from $2.65 million for the first six months of 2009.
The net loss to common stockholders for the first half of 2010 was $4.93 million or $0.13 per share, compared with a net loss to common stockholders for the first half of 2009 of $1.79 million or $0.05 per share. The net loss for the 2010 period includes a charge of $1.95 million, which represents the amortization of a beneficial conversion feature on the Series D preferred stock issued in association with the fundraise conducted in conjunction with the closing of the Sorin acquisition in April 2010. This is a non-recurring, non-cash book charge with no net effect on total shareholders' equity.
Cash and Liquidity
Cash and cash equivalents as of June 30, 2010 were $1.07 million, compared with $2.11 million as of December 31, 2009. The Company used $2.38 million to fund operating activities during the first six months of 2010.
Andrew Maslan, Cytomedix's Chief Financial Officer, noted, "Our operating loss for the second quarter and six months of 2010 was approximately $1.56 million and $2.62 million, respectively. However, as described above, our financial results for the second quarter of 2010 included a number of unusual items that impact the comparability to our prior reported results. Excluding the above mentioned inventory fair value adjustment of $168,000 and Sorin commission of $104,000 that impacted cost of goods sold and non-recurring transition/transaction related expenditures of $234,000 for the quarter and $295,000 for the six months, that impacted operating expenses, our 'adjusted' operating loss for the second quarter and six months of 2010 was approximately $1.05 million and $2.05 million respectively."
For additional information, please refer to the Company's quarterly report on Form 10-Q, filed with the Securities and Exchange Commission on August 16, 2010.
Conference Call
Cytomedix management will hold a conference call to discuss these results and answer questions beginning at 10:00 a.m. Eastern time on Tuesday, August 17, 2010. Shareholders and other interested parties may participate in the call by dialing 866-788-0542 (domestic) or 857-350-1680 (international) and entering passcode 20053010. The call will also be broadcast live on the Internet at www.streetevents.com, www.fulldisclosure.com and www.cytomedix.com.
A replay of the conference call will be available beginning two hours after its completion through August 24, 2010 by dialing 888-286-8010 (domestic) or 617-801-6888 (international) and entering passcode 25082458. The call will also be archived for 90 days at www.streetevents.com, www.fulldisclosure.com and www.cytomedix.com.
About Cytomedix, Inc.
Cytomedix is a biotechnology company that develops, sells and licenses regenerative biological therapies primarily to address the areas of wound care, inflammation and angiogenesis. The Company currently markets the AutoloGel™ System, a device for the production of platelet rich plasma ("PRP") gel derived from the patient's own blood for use on a variety of exuding wounds; the Angel® Whole Blood Separation System, a blood processing device and disposable products used for separation of whole blood into red cells, platelet poor plasma ("PPP") and PRP in surgical settings; and the activAT® Autologous Thrombin Processing Kit, which produces autologous thrombin serum from PPP. The activAT® kit is sold exclusively in Europe and Canada, where it provides a completely autologous, safe alternative to bovine-derived products. The Company is currently pursuing a multi-faceted strategy to penetrate the chronic wound market with its products. Cytomedix is also pursuing opportunities for the application of AutoloGel™ and PRP technology into other markets such as hair transplantation and orthopedics, as well as actively seeking complementary products for the wound care market. The Company seeks to monetize other product candidates in its pipeline through strategic partnerships, out-licensing or sale. Most notably is its anti-inflammatory peptide (designated "CT-112") that has shown promise in preclinical testing. Additional information regarding Cytomedix is available at www.cytomedix.com.
Safe Harbor Statement
Statements contained in this communication not relating to historical facts are forward-looking statements that are intended to fall within the safe harbor rule for such statements under the Private Securities Litigation Reform Act of 1995. The information contained in the forward-looking statements is inherently uncertain, and Cytomedix's actual results may differ materially due to a number of factors, many of which are beyond Cytomedix's ability to predict or control, including among others, viability and effectiveness of the Company's sales approach and overall marketing strategies, the outcome of development or regulatory review of CT-112, commercial success or acceptance by the medical community, competitive responses, the Company's ability to raise additional capital and to continue as a going concern, Cytomedix's ability to execute on its strategy to market the AutoloGel™ System as contemplated, the Company's ability to capitalize on opportunities in the European market, the Company's ability to successfully integrate the Angel® and activAT® product lines into its existing business, to assume and satisfy certain liabilities related to the Angel® and activAT® product lines, or its ability to service the deferred payments related to the acquisition of the Angel® and activAT® product lines. These forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual events to differ from the forward-looking statements. More information about some of these risks and uncertainties may be found in the reports filed with the Securities and Exchange Commission by Cytomedix, Inc. Cytomedix operates in a highly competitive and rapidly changing business and regulatory environment, thus new or unforeseen risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. Except as is expressly required by the federal securities laws, Cytomedix undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason.
| CYTOMEDIX, INC. | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (Unaudited) | ||
| June 30, | December 31, | |
| 2010 | 2009 | |
| ASSETS | ||
| Current assets | ||
| Cash | $ 1,069,611 | $ 2,107,499 |
| Short-term investments, restricted | 52,762 | 52,672 |
| Accounts and royalties receivable, net | 1,057,693 | 180,560 |
| Inventory | 1,030,372 | 25,986 |
| Prepaid expenses and other current assets | 77,517 | 140,745 |
| Deferred costs, current portion | 327,630 | -- |
| Total current assets | 3,615,585 | 2,507,462 |
| Property and equipment, net | 838,863 | 84,623 |
| Deferred costs | 245,722 | -- |
| Other intangibles, net | 3,316,292 | -- |
| Goodwill | 706,823 | -- |
| Total assets | $ 8,723,285 | $ 2,592,085 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities | ||
| Accounts payable and accrued expenses | $ 1,827,471 | $ 1,037,894 |
| Note payable, current portion | 1,048,209 | -- |
| Dividends payable on preferred stock | 97,434 | 7,285 |
| Total current liabilities | 2,973,114 | 1,045,179 |
| Note payable | 2,960,649 | -- |
| Total liabilities | 5,933,763 | 1,045,179 |
| Commitments and contingencies | ||
| Stockholders' equity | ||
|
Series A Convertible preferred stock; $.0001 par value, authorized 5,000,000 shares; 2010 and 2009 issued and outstanding - 97,663 shares, liquidation preference of $97,663 |
10 | 10 |
|
Series B Convertible preferred stock; $.0001 par value, authorized 5,000,000 shares; 2010 and 2009 issued and outstanding - 65,784 shares, liquidation preference of $65,784 |
7 | 7 |
|
Series C Convertible preferred stock; $.0001 par value, authorized 1,000,000 shares; 2010 and 2009 issued and outstanding -- 0.0 shares |
-- | -- |
|
Series D Convertible preferred stock; $.0001 par value, authorized 2,000,000 shares; 2010 issued and outstanding - 3,650 shares, liquidation preference of $3,650,000 |
-- | -- |
|
Common stock; $.0001 par value, authorized 100,000,000 shares; 2010 issued and outstanding - 37,547,879 shares; 2009 issued and outstanding -- 37,273,628 shares |
3,755 | 3,727 |
| Additional paid-in capital | 48,213,257 | 44,074,575 |
| Accumulated deficit | (45,427,507) | (42,531,413) |
| Total stockholders' equity | 2,789,522 | 1,546,906 |
| Total liabilities and stockholders' equity | $ 8,723,285 | $ 2,592,085 |
| CYTOMEDIX, INC. | ||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (Unaudited) | ||||
| Three Months Ended | Six Months Ended | |||
| June 30, | June 30, | |||
| 2010 | 2009 | 2010 | 2009 | |
| Revenues | ||||
| Sales | $ 1,147,219 | $ 72,928 | $ 1,210,479 | $ 115,303 |
| Royalties | -- | 496,378 | 115,474 | 993,140 |
| Total revenues | 1,147,219 | 569,306 | 1,325,953 | 1,108,443 |
| Cost of revenues | ||||
| Cost of sales | 685,278 | 26,584 | 700,215 | 34,638 |
| Cost of royalties | -- | 91,389 | (189,380) | 216,322 |
| Total cost of revenues | 685,278 | 117,973 | 510,835 | 250,960 |
| Gross profit | 461,941 | 451,333 | 815,118 | 857,483 |
| Operating expenses | ||||
| Salaries and wages | 664,750 | 639,423 | 1,286,951 | 1,275,078 |
| Consulting expenses | 119,404 | 36,963 | 195,501 | 52,784 |
| Professional fees | 401,718 | 146,170 | 587,125 | 306,024 |
| Research, development, trials and studies | 156,407 | 99,923 | 220,898 | 179,116 |
| General and administrative expenses | 679,494 | 419,343 | 1,145,181 | 832,636 |
| Total operating expenses | 2,021,773 | 1,341,822 | 3,435,656 | 2,645,638 |
| Loss from operations | (1,559,832) | (890,489) | (2,620,538) | (1,788,155) |
| Other (expenses) income | ||||
| Interest, net | (274,645) | 3,695 | (275,146) | 10,525 |
| Other, net | (410) | -- | (410) | -- |
| Total other income (expenses) | (275,055) | 3,695 | (275,556) | 10,525 |
| Loss before provision for income taxes | (1,834,887) | (886,794) | (2,896,094) | (1,777,630) |
| Income tax provision | -- | -- | -- | -- |
| Net loss | (1,834,887) | (886,794) | (2,896,094) | (1,777,630) |
| Preferred dividends: | ||||
| Series A preferred stock | 2,073 | 1,916 | 4,106 | 3,793 |
| Series B preferred stock | 1,410 | 1,956 | 2,793 | 3,873 |
| Series D preferred stock | 83,250 | -- | 83,250 | -- |
|
Amortization of beneficial conversion feature on Series D preferred stock |
1,948,155 | -- | 1,948,155 | -- |
| Net loss to common stockholders | $ (3,869,775) | $ (890,666) | $ (4,934,398) | $ (1,785,296) |
| Loss per common share -- | ||||
| Basic and diluted | $ (0.10) | $ (0.03) | $ (0.13) | $ (0.05) |
| Weighted average shares outstanding -- | ||||
| Basic and diluted | 37,502,673 | 33,962,623 | 37,388,783 | 33,962,623 |